Cambridge O Level: Business Studies 7115/22 October/November 2020

Cambridge O Level
BUSINESS STUDIES 7115/22

Paper 2 Case Study October/November 2020
MARK SCHEME
Maximum Mark: 80
Published
This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.
Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.
Cambridge International will not enter into discussions about these mark schemes.
Cambridge International is publishing the mark schemes for the October/November 2020 series for most
Cambridge IGCSE™, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.
This document consists of 15 printed pages.
© UCLES 2020 [Turn over

7115/22 Cambridge O Level – Mark Scheme October/November
PUBLISHED 2020
Generic Marking Principles
These general marking principles must be applied by all examiners when marking candidate answers.
They should be applied alongside the specific content of the mark scheme or generic level descriptors
for a question. Each question paper and mark scheme will also comply with these marking principles.
GENERIC MARKING PRINCIPLE 1:
Marks must be awarded in line with:
• the specific content of the mark scheme or the generic level descriptors for the question
• the specific skills defined in the mark scheme or in the generic level descriptors for the question
• the standard of response required by a candidate as exemplified by the standardisation scripts.
Marks awarded are always whole marks (not half marks, or other fractions).
Marks must be awarded positively:
• marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit
is given for valid answers which go beyond the scope of the syllabus and mark scheme,
referring to your Team Leader as appropriate
• marks are awarded when candidates clearly demonstrate what they know and can do
• marks are not deducted for errors
• marks are not deducted for omissions
• answers should only be judged on the quality of spelling, punctuation and grammar when these
features are specifically assessed by the question as indicated by the mark scheme. The
meaning, however, should be unambiguous.
Rules must be applied consistently, e.g. in situations where candidates have not followed
instructions or in the application of generic level descriptors.
Marks should be awarded using the full range of marks defined in the mark scheme for the question
(however; the use of the full mark range may be limited according to the quality of the candidate
responses seen).
Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should
not be awarded with grade thresholds or grade descriptors in mind.
© UCLES 2020 Page 2 of 15

PUBLISHED 2020
Question Answer Marks
1(a) Explain two reasons why finance is needed by CC. 8
Award 1 mark for each relevant reason (maximum of two):
Relevant answers might include:

• For the purchase of investment goods/capital/expansion of existing
business (1) – e.g. buy equipment/machinery (1) – high amount of
finance needed so may not all be from owners capital (1)
• To provide working capital/pay expenses/fixed costs/variable costs/
overheads/day-to-day expenses (1) – e.g. payment of wages/purchase of
raw materials (1) – if not able to pay costs then output cannot be
produced (1) &/or - prevents cash flow problems/lack of liquidity (1)
• Development of new product (1) – high cost of producing prototypes/cost
of market research for new product (1) – outflow of cash with no inflow for
a certain time (1)
• Start up a new business (1) – needs to purchase equipment/raw
materials (1) owner may lack sufficient capital (1) &/or – may take time for
sufficient cash to be built up in the business to pay for assets (1)
Award a maximum of 3 additional marks for each explanation of the reason –

one of which must be applied to this context.
For example:
CC needed money when it started up (1) and each partner invested $10 000
(app). This finance paid for training new employees, so they are effective at
work (1) and for equipment to help the workers be efficient (1).
Application could include: mobile phone covers; $10 000 invested by each

partner; bank loan of $10 000; leased a factory; brother; two partners.

PUBLISHED 2020
1(b) Explain the benefits and limitations of the following two ways of 12
achieving quality production. Which way should CC use? Justify your
answer.
• Quality control
• Quality assurance
Level Description Marks
3 Sound application of knowledge and understanding of 9–12

relevant business concepts using appropriate terminology.
Detailed discussion of both methods. Well-justified

recommendation.
Candidates discussing both methods in detail, in context

and with well-justified recommendation, including why the
alternative method was rejected, should be rewarded with
the top marks in the band.

Detailed discussion of at least one method.
Judgement with some justification/some evaluation of

choice made.
Candidates discussing at least one method in detail and

applying it to the case should be rewarded with the top
marks in the band.
1 Limited application of knowledge and understanding of 1–4

relevant business concepts.
Limited ability to discuss the methods with little/no

explanation.
Simple judgement with limited justification/limited

evaluation of choice made.
Candidates outlining both methods in context should be

rewarded with the top marks in the band.
0 No creditable response. 0

PUBLISHED 2020
1(b) Relevant points might include:
Advantages Disadvantages
Quality control • Products checked at • It raises costs as

the end of the inspectors need to be
production line tries to employed
eliminate faults and • Identifies faulty
errors before the products at the end of
customer receives the the process but does
mobile phone cover not identify where the
• Less training is fault has occurred
required for the • If do not identify the
10 workers as fault, then it does not
inspectors check the eliminate the faulty
quality of the covers process
before they leave the • High costs if phone
factory covers need to be
scrapped
Quality assurance • Products checked at • Can be expensive to

every stage of the train employees to
production process to check the quality of
try to eliminate faults their own work
or errors at each • The reliability of
stage of production employees is
before passing to the important, and they
next stage reducing need to be committed
faults at the end or quality assurance
• Therefore there are will not be effective
fewer customer • Takes longer to
complaints of faulty produce phone
phone covers covers as each
• Reduced costs if worker needs to do
fewer mobile covers their own check for
are scrapped faults
• Can make workers
feel trusted and may
improve motivation

PUBLISHED 2020
1(b)
Recommendation Justification may include:
• If the process to produce a mobile phone cover is
simple, then quality control may be most suitable
as inspectors may just carry out a simple check at
the end of the production line and the 10
production workers do not need to be trained to
check their own work, reducing training costs,
which they would have to do if quality assurance
was used.
• Quality assurance is best because each stage of
production can be checked so it is less likely for a
faulty product to go to customers than if quality
control is used. It keeps a good brand image for
CC products. It will ensure faults do not need to be
repaired, reducing costs of faulty products
being scrapped. Also cost of employing
inspectors is saved, which would have to be paid
with quality control.
2(a) Explain two possible reasons why Aisha set up CC as a business 8

partnership.
Award 1 mark for each relevant reason (maximum of two reasons).

• More capital can be raised - than if the business was a sole trader when
only one person would be providing capital
• Shared responsibilities of running the business – each partner can
specialise in one aspect of the business where they have expertise
• To share risks – if there are debts or losses these are shared between
the partners
• To share ideas/more ideas/help make decisions
• To share the workload/cover when one partner takes holidays
Award a maximum of 3 additional marks for each explanation of the reason –

one of which must be applied to this context.
For example:
Aisha can raise more capital (1) as she can also gain $10 000 from her
brother (app). If CC was a sole trader then she would only have her own
money which may not be sufficient (1) and additional capital will allow Aisha to
invest in more equipment for the factory (1).
Application could include: mobile phone covers; $10 000 invested by each

partner; bank loan of $10 000; leased a factory when setting up; brother;
always wanted to be her own boss; new business; Operations Manager.

PUBLISHED 2020
2(b) Consider the advantages and disadvantages of the following three 12

methods of employee selection. Which method should CC use when
recruiting production workers? Justify your answer.
• Application form
• Interview
• Aptitude tests

Detailed discussion of the two or more methods. Well-

justified recommendation.
Candidates discussing the three methods in detail, in

context and with well-justified recommendation, including
why the alternative methods were rejected, should be
rewarded with the top marks in the band.

Detailed discussion of at least one method.

choices made.
Candidates discussing two or more methods in detail and

applying them to the case should be rewarded with the top
marks in the band.

Limited ability to discuss the methods with little/no

explanation.

evaluation of choices made.
Candidates outlining the three methods in context should

be rewarded with the top marks in the band.

PUBLISHED 2020
Application form • Provides a wide range of written information on the

applicants – quicker to gather information than
interviewing applicants
• Easier to compare applicants
• Takes time to review application forms – and can
be referred back to later to compare applicants
• Applicants may lie on the form
• The workers need to be skilled to operate the
equipment and therefore an application form will
show the qualifications they have so CC can see if
they can do the job efficiently
• The two new production workers may need
qualifications/basic education to show they are
capable of being trained to operate machinery and
this can be a question on the application form
Interview • Will show Aisha the personality of the applicant.

Meeting them face-to-face will be easier to assess
their personality and whether the applicant may fit
into the working environment of the factory making
phone covers
• Shows whether the worker will work well in a team
as team work is required on the production line
– this may improve worker motivation
• If the worker is unfriendly then they may not be
good to employ as the other workers may not like
them and output may fall
• It will allow applicants to ask questions and
therefore they can be sure the job is right for them.
If they are appointed and do not like the work, then
they may leave and CC will have increased costs
from recruiting more workers to replace those that
have left
Aptitude test • Shows whether the worker can do the job

effectively – cannot lie about own skills
• Should prevent an unsuitable person being
employed and efficiency producing phone covers
being reduced in the factory
• Easier to select the most skillful person for the job
– possibly reducing unit costs if productivity is
higher
• Can be expensive and time consuming to carry out
tests showing their skill at operating the
equipment on the production line

PUBLISHED 2020
2(b)
Recommendation Justification may include:
• Application forms should be used as all the
necessary information is provided on the form and
a written record is provided that can be checked.
Interviews may miss out questions and are time
consuming to carry out. Aptitude tests may also
take too much time to carry out and may not show
the potential of applicants to learn new skills
suitable for CC to produce mobile phone
covers.
• Interviews should be used as they allow CC to
assess if the worker will fit into the teams in the
factory and work well with the other employees in
producing mobile phone covers. An application
form will not allow CC to assess whether the
applicant will fit into the working environment.
• Aptitude tests should be used as they show the
ability of the applicant to actually carry out the job
efficiently when producing mobile phone covers,
whereas someone can seem very good on an
application form but be less suitable in practice.
3(a) Explain two reasons why a new business is at a greater risk of failing 8
than an established business.
Award 1 mark for each relevant reason (maximum of two reasons).

• Lacks finance – liquidity/cash flow problems
• Poor planning - lack of experience - may not have a business plan - may
lack management skills – lacks efficiency
• Inadequate research – no effective market research – not identified
customer needs - lack of demand
• Difficulties of breaking into a new market - does not have brand
loyalty/there is high competition in the market
• Difficulty competing with larger established firms in the market – as
cannot benefit from economies of scale
• Overexpansion – tries to grow too quickly at the start – objectives too
ambitious when lack of experience in running the business
• Unable to respond quickly enough to changes in the external influences –
lack of financial reserves – e.g. not responding to shift to online sales
Award a maximum of 3 additional marks for each explanation of the reason.
For example:
Inadequate research (1) as a business might not have carried out accurate
market research and felt that their products will be in demand (1) but if the
products are not popular it will lead to fewer products being sold (1) resulting
in lower revenue and possible business failure if costs cannot be covered (1).

PUBLISHED 2020
3(b) Consider the following three elements of a suitable marketing mix for 12
CC’s new range of personalised mobile phone covers. Justify which
element is the most important.
• Pricing method
• Method of promotion
• Place – distribution channel

Detailed discussion of two or more elements.
Well-justified conclusion of the most important element of

the marketing mix.
Candidates discussing three elements of the marketing

mix in detail, in context and with well-justified conclusion,
including why the alternative elements were rejected,
should be rewarded with the top marks in the band.

Detailed discussion of at least one element of the

marketing mix.

choices made.
Candidates discussing two or more elements of the

marketing mix in detail and applying them to the case
should be rewarded with the top marks in the band.

Limited ability to discuss the elements of the marketing mix

with little/no explanation.

Candidates outlining three elements of the marketing mix

in context should be rewarded with the top marks in the
band.

PUBLISHED 2020
Price Identifies and justifies a suitable pricing method for new

phone covers aimed at high income 18–25 year olds
• Price skimming as it’s a new product with few
competitors at the introductory stage of the product life
cycle – so can charge a high price as high income
customers willing to pay to own one first
• Cost-plus pricing to make sure a profit is made on the
new cover
• Competitive pricing could be used as there are few
competitors in this market at present
• Penetration pricing to enter a new target market of 18–25
year olds
Promotion Identifies and justifies a suitable promotional method for new

• Advertise in specific magazines read by young people -
niche market aimed at young people
• Targets young people aged 18–25 – advertising on
social media may go viral and low marketing costs – CC
is a small business so needs to keep down the
marketing costs
• Suitable examples of promotional methods used for
targeting high income 18–25 year olds – e.g. discounting
Place Identifies and justifies a suitable distribution channel for new

• Sold online – easily accessible by young people aged
18–25 – used to ordering online – download an app to
order directly from CC – as young people may not use
main retail outlets
• Shopping malls are used by target market of higher
income young people
• Direct distribution increases delivery costs – but CC
keeps profit margin of retail outlets
Conclusion Justification of the most important element may include:

• If the pricing method is wrong, then the target market will
not be interested in the new product even if it is promoted
effectively and sold using the most suitable distribution
channel for young people aged 18–25 so price is most
important.
• Promotion is most important as if people are not aware of
the covers then even if the price and place are suitable
high income consumers will not buy the new covers.
• Place has to be suitable because even if consumers are
attracted to buying the mobile phone covers with the right
price and promotions to attract them, if these high
income consumers cannot easily find where to buy the
covers they will not sell well.

PUBLISHED 2020
4(a) Using the data in Appendix 3, calculate the following ratios for CC: 8
• Gross profit margin

• Profit margin
• Current ratio
• Acid test ratio
Show your workings.
Award 1 mark for each correct formula (maximum of four)
gross profit/revenue × 100 (1)

profit/revenue × 100 (1)
current assets/current liabilities (1)
current assets – inventory/current liabilities (1)
OR
1 mark for use of correct formula + 1 mark for correct answer (4 × 2 marks)
$400 000/$800 000 × 100 (1) = 50% (1)
$150 000/$800 000 × 100 (1) = 18.75% (1)
$20 000/$15 000 (1) = 1.33 or 4:3 (1)
$15 000/$15 000 (1) = 1 (1)

PUBLISHED 2020
4(b) Consider how the changes in the following three government legal 12
controls could affect CC. Which change is likely to have the greatest
effect on profit? Justify your answer.
• Increase in the minimum wage

• More controls over what can be stated in advertisements
• No waste plastic can be sent to landfill sites

Detailed discussion of two or more changes. Well-justified

conclusion.
Candidates discussing all three changes in detail, in

context and with well-justified conclusion, including why
the alternative changes were rejected, should be rewarded
with the top marks in the band.

Detailed discussion of at least one change.

choices made.
Candidates discussing two or more changes in detail and

applying them to the case should be rewarded with the top
marks in the band.

Limited ability to discuss the changes with little/no

explanation.

Candidates outlining the three changes in context should

be rewarded with the top marks in the band.

PUBLISHED 2020
4(b) Relevant reasons might include:
Increase in the • If wages increase it may improve motivation

minimum wage • Increased costs as have to pay 10 workers higher
pay
• Already pay just above minimum wage so may not
have to increase pay – costs may not change
• Alternative employers may attract the workers away
from CC if does not give a pay increase – higher
recruitment costs
• Increase in potential customers due to increase in
disposable income leading to more sales of CC’s
mobile phone covers
More controls • Adverts for mobile phone covers may have to be

over what can changed if they are misleading and may be less
be stated in appealing/less attractive to customers leading to
advertisements lower sales
• May not make any difference if CC already only
makes true claims about the covers always
preventing phones from being damaged
• Competitors will have to tell the truth so may
increase sales of CC phone covers if they are better
No waste • Increased cost to remove waste from factory as all

plastic can be plastic will need to be disposed of correctly – may
sent to landfill recycle plastic
sites • If competitors have higher costs because they
produce more plastic waste then CC will be more
competitive and increase sales of phone covers and
possibly have higher profit
• Need to train 10 workers and change production
techniques to minimise waste – increases cost
initially – long-term could save on purchasing raw
materials

PUBLISHED 2020
4(b)
Conclusion Justification may include:
• Impact will depend on what competitors are paying
as wages but CC is paying just above the minimum
wage and if it has to increase pay then wage costs
will rise and this will have the greatest effect on profit
as it is likely to fall. CC is already producing plastic
waste but it could simply change the materials used
to produce the phone covers so this legal control
would have no effect. Advertising claims may already
be truthful so this will not have any effect on profit.
• Stricter laws on advertising are likely to have a big
effect on profit if CC is taken to court and fined for
making false claims. If the claims about protecting
phones from damage are not true then CC may
need to change its advertising to stop it having bad
publicity. Otherwise, this could lead to a large fall in
sales and profit and it will be the biggest effect on
profit of the three changes in legal controls.
• Increased costs from the disposal of plastic waste
will have the biggest impact on profit as prices may
have to rise to cover the increased costs of
alternative ways of waste disposal. CC already
produces a large amount of plastic waste so costs
will increase significantly, and sales will fall due to
the higher prices.

Cambridge O Level: Business Studies 7115/22 October/November 2020

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Cambridge O Level: Business Studies 7115/22 October/November 2020

Uploaded by

Copyright:

Available Formats

Cambridge O Level

BUSINESS STUDIES 7115/22

This document consists of 15 printed pages.

© UCLES 2020 [Turn over

Generic Marking Principles

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

GENERIC MARKING PRINCIPLE 2:

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

GENERIC MARKING PRINCIPLE 4:

GENERIC MARKING PRINCIPLE 5:

GENERIC MARKING PRINCIPLE 6:

© UCLES 2020 Page 2 of 15

Question Answer Marks

1(a) Explain two reasons why finance is needed by CC. 8

Award 1 mark for each relevant reason (maximum of two):

Relevant answers might include:

Award a maximum of 3 additional marks for each explanation of the reason –

Application could include: mobile phone covers; $10 000 invested by each

© UCLES 2020 Page 3 of 15

Question Answer Marks

Level Description Marks

3 Sound application of knowledge and understanding of 9–12

Detailed discussion of both methods. Well-justified

Candidates discussing both methods in detail, in context

2 Sound application of knowledge and understanding of 5–8

Detailed discussion of at least one method.

Judgement with some justification/some evaluation of

Candidates discussing at least one method in detail and

1 Limited application of knowledge and understanding of 1–4

Limited ability to discuss the methods with little/no

Simple judgement with limited justification/limited

Candidates outlining both methods in context should be

© UCLES 2020 Page 4 of 15

Question Answer Marks

1(b) Relevant points might include:

Quality control • Products checked at • It raises costs as

Quality assurance • Products checked at • Can be expensive to

© UCLES 2020 Page 5 of 15

Question Answer Marks

Question Answer Marks

2(a) Explain two possible reasons why Aisha set up CC as a business 8

Award 1 mark for each relevant reason (maximum of two reasons).

Relevant answers might include:

Award a maximum of 3 additional marks for each explanation of the reason –

Application could include: mobile phone covers; $10 000 invested by each

© UCLES 2020 Page 6 of 15

Question Answer Marks

2(b) Consider the advantages and disadvantages of the following three 12

Level Description Marks

3 Sound application of knowledge and understanding of 9–12

Detailed discussion of the two or more methods. Well-

Candidates discussing the three methods in detail, in

2 Sound application of knowledge and understanding of 5–8

Detailed discussion of at least one method.

Judgement with some justification/some evaluation of

Candidates discussing two or more methods in detail and

1 Limited application of knowledge and understanding of 1–4

Limited ability to discuss the methods with little/no

Simple judgement with limited justification/limited

Candidates outlining the three methods in context should

© UCLES 2020 Page 7 of 15